Theresa May: I do agree. My hon. Friend makes an important point about role of police and crime commissioners. They will indeed be the voice of local policing, and I am sure that as such they will want to ensure that police officers are spending as much of their time fighting crime—and not doing paperwork—as they can, and that they will be a powerful force in removing bureaucracy from the police.

Damian Green: My right hon. Friend will know that we have introduced more staff, as well as the range of other measures that I mentioned in answer to an earlier question. Not only BAA—but the airlines themselves, including the head of safety and security at Virgin Atlantic—has said that we have seen some improvement in the last few weeks. I am also able to assure my right hon. Friend and the House that more people are working there this week than there were last week, and that there will be more next week. As the summer gets busier and busier, there will be an increasing number of staff on the desks.

James Brokenshire: The Government and everyone involved are focused on delivering a safe, secure and successful games. We are confident in police preparations, which are at an advanced stage of readiness and are on track for the Olympic and Paralympic games.

Theresa May: I say to the right hon. Lady that it is this Government who are putting in place controls on our immigration system; it was the previous Labour Government who allowed people to come in without any controls on the immigration system. We are putting in place a policy that will see the number of people coming into this country reduce and, in both the UK Border Agency and the UK Border Force, we are putting right the problems that grew up under the previous Labour Government. She talks about the relaxation of controls, but the inspector said that that had been happening since 2007. It is about time that the Labour party accepted responsibility for what it did in government.

Sheila Gilmore: Given that the vast majority of international students leave the UK at the end of their courses, why do the Government insist on counting them when calculating net migration figures, which other countries do not count, to the detriment of institutions such as Edinburgh university in my constituency that are competing with other countries for those students?

Theresa May: The hon. Lady raises a very important issue in relation to the terrible situation that we have seen in Rochdale, but, as she and others have said, sadly we see too many such cases throughout the country of grooming and sexually exploiting girls. We have already had a report from the Child Exploitation and Online Protection Centre into the issue, and we will look at it again and at how it is dealt with across the country. We have made sure that in the Police Reform and Social Responsibility Act 2011 there is a specific duty on police forces and on police and crime commissioners in relation to the care of children.

Chuka Umunna: What a complete and utter shambles! I understand, as the Minister said, that the Secretary of State is in the north-east today. However, will he explain why the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for North Norfolk (Norman Lamb), who is responsible for employment relations and is the author of this book
	“to help you to maximise compensation awards”
	in the employment tribunal, is not responding to this question, given that he would appear to be the expert on these matters?
	The Secretary of State has called the Beecroft report, which has been promoted by the Prime Minister, “bonkers”. However, on page 3 of the report, Mr Beecroft says that he owes a “debt of gratitude” to the deputy director of labour law at the Department for Business, Innovation and Skills, who helped to produce it. Will the Minister confirm that his Department was complicit and fully co-operated in the production of the report, despite the misgivings of the Secretary of State?
	We agree that improvements can be made to the way in which employment tribunals operate, for the sake of employees and employers, but we do not think that watering down people’s fundamental rights at work is a substitute for a growth strategy.
	The Secretary of State has said that there is a “reasonably good balance” between workers’ rights and employers’ flexibility. The Prime Minister and the Chancellor, however, suggest that the balance has gone too far in favour of employees. Will the Minister tell us who is determining Government policy in this area—his boss or his ultimate masters in Downing street?
	On growth, Beecroft suggests that his recommendations will solve all our problems. However, the double-dip recession that we are in is not a consequence of people’s right not to be unfairly dismissed or of our employment law regime; it is a consequence of the huge drop in demand that has flowed from the loss of business and consumer confidence caused by the Government’s policies.
	Is it not the case that putting people in fear of being fired at will, far from promoting growth, will have a huge detrimental impact on consumer confidence? I ask that because Mr Beecroft proposes to give businesses of fewer than 10 employees the power to fire at will through compensated no-fault dismissal. That could affect more than 3.6 million workers in the private sector. Mr Beecroft said:
	“The downside of the proposal is that some people would be dismissed simply because their employer did not like them.”
	That, he said, was “a price worth paying”. That is wrong. Does the Minister agree?
	Does not the noise from Government around this report demonstrate what our business leaders have made very clear: that the Government have lost the plot on growth? Having sought to blame British businesses for the lack of growth, with Ministers telling firms to stop “whinging” and to “work harder”, the Government now want to blame the hard-working employees in those businesses for the mess that they created. The truth is that they have run out of excuses for tipping the country into a double-dip recession. Everyone wants them to change course to get more people into work. That is what they should concentrate on, not on making it easier to do precisely the opposite.

Pat McFadden: There is a flaw in the Minister’s logic. He cannot on the one hand claim credit for the creation of hundreds of thousands of jobs in the private sector, including the welcome announcement at Ellesmere Port last week, and then say there is a huge problem for employers wanting to hire people. Flexibility in labour markets is a good thing, but does he accept that what is really stopping companies from hiring is the lack of confidence in economic prospects in this country and the eurozone? In that context, are not the proposals fiddling while Athens burns?

Mark Prisk: Absolutely. That is why I have ensured that the report is published this week, while the House is sitting, as a matter of respect for the House. The call for evidence will close on 8 June, when we are not sitting. I hope that Members will take the opportunity to participate in it; I am sure that the Secretary of State will be delighted to hear from colleagues on the matter.

Mark Prisk: There we have the practical evidence of someone who is actually running a small business. When we put in well intentioned legislation to try to remove every possible risk from the employment market, the greatest danger is that the most vulnerable workers—those on the edge for whom it takes a lot of effort to bring into the labour market—can be kept out by such legislation. That is what we always have to bear in mind.

Mark Prisk: I welcome that positive suggestion, and I am more than happy to accede to it—as I am sure will be the Secretary of State.

Mark Prisk: This is precisely one of the issues that Beecroft is considering and one that the Department is reviewing. Some good, positive ideas have been made since we called for evidence on 8 March, and we will continue to reflect on it and seek to strike the right balance.

Chris Heaton-Harris: Any idea that unites the shadow Business Secretary and Lord Oakeshott from the other place has to be worthy of proper thought and attention. I would urge my hon. Friend to consult not only with those two individuals, but with small businesses in general, because I think he will find a huge amount of support for the ideas contained in the Beecroft report.

Anne McGuire: The Minister talks about introducing new practices. I would suggest that he is actually reintroducing some pretty old practices, in allowing someone to be dismissed because someone does not like the look of their face. Will he reflect on what he is saying today and think seriously about whether he wants to return to the really bad old days, when people were summarily dismissed for no apparent reason?

Mark Prisk: My hon. Friend is absolutely right. This is the sort of informed and balanced overall debate that we want. That is why we have called for evidence and why we are publishing this report. The issue should not be about just the clichés we have heard from the Opposition, as it should be about making sure that we get the whole workplace right.

Andrew Stunell: I am delighted to be taking part in the resumption of the debate from the previous Session, as it is good to be resuming our consideration of this important Bill and these important provisions. The Bill is a major step forward in localising fundraising and decision making to local councils and restoring to them local control. Discussing local government finance is very much an acquired taste, albeit one that I can see has not been acquired by too many hon. Members today.
	May I draw the House’s attention to the publication of the statements of intent, which the Department has tabled for the benefit of hon. Members over the past few days? The statements bring to the House’s attention a great deal of the technical work behind the Bill and of how the Government intend the scheme should be implemented over the coming months.

Andrew Stunell: I am certainly keen to offer, on behalf of the Department and the Government, a clear undertaking that it is not the intention that that should happen, and that the provisions before the House do not create the opportunity for that to happen.
	To return to the question asked by the right hon. Member for Leeds Central (Hilary Benn), proposed new section 14A, which relates to the investigation of fraud, will enable local authorities to investigate the eligibility of a person for a council tax reduction, which might require access to the individual’s records, in the same way as can currently be done for council tax benefit. That is separate to the provisions elsewhere relating to HMRC’s sharing of data with local authorities.
	Proposed newparagraph 15B(7), of schedule 2 to the 1992 Act, sets out the procedure that Welsh Ministers must follow when making these regulations, which will be through a statutory instrument, subject to annulment procedures. Proposed new paragraph 15C(7) sets out the procedure that Scottish Ministers must follow when making regulations in respect of the data-sharing provisions, which will be through a Scottish statutory instrument, subject to the negative procedure. Without that legal gateway, HMRC would not be able to provide the information that billing authorities need for council tax purposes, such as calculating an entitlement to a reduction under a council tax reduction scheme, and if that were the case it would clearly increase the complexity for claimants and the administrative costs for billing authorities.
	Government amendments 42 to 50 and 56 to 60 would provide Welsh Ministers with the powers to place a duty on specified bodies in Wales to introduce council tax reduction schemes in Wales. Welsh Ministers have developed plans for locally delivered council tax reductions and asked for these amendments, which will enable them to prescribe, by regulations, for establishing in Wales council tax reduction schemes that are broadly similar to those that billing authorities in England will be required to introduce in accordance with the Bill. Those powers would provide Welsh Ministers with the scope to establish the remit for council tax reduction schemes in Wales that were appropriate for Wales.
	Welsh Ministers have said that they intend to use the powers to introduce a single national scheme set out in regulations and include the reforms necessary to meet the 10% reduction in funding. They intend local authorities to be given an amount of local flexibility in the new scheme’s delivery, and deviation from the national scheme will be funded locally. Welsh Ministers have recently consulted on the policy’s detail, and they intend to set out their proposals on vulnerable groups, including pensioners, in due course.
	Amendment 44, to section 13A of the Local Government Finance Act 1992, would provide Welsh Ministers with the power to require specified bodies in Wales to introduce council tax reduction schemes, and the proposed change details the scope of the regulations that Welsh Ministers would be able to make. Amendment 45 sets out the procedure that Welsh Ministers would have to follow when making regulations on the introduction of council tax reduction schemes.
	The amendments include a series of provisions that I am very happy to bring to the House’s attention if Members would like me to do so, but it might be sensible if I proceed by saying simply that the amendments set out a range of requirements and rules that are intended entirely to ensure that the scheme can be applied as Welsh Ministers determine in the Welsh environment.
	Amendments 51 and 54 are technical amendments to ensure that we can deliver our policy to protect pensioners, enabling regulations to provide for a default scheme that largely replicates current council tax benefit, and providing reassurance to local authorities that their schemes can incorporate certain features of current council tax benefit when they choose them to do so.
	Taken together the amendments to schedule 4 would achieve that aim by ensuring that regulations prescribing requirements for schemes and regulations prescribing
	the default scheme may incorporate provisions equivalent to those that are, or could be, provided for in the sections of existing legislation relating directly to council tax benefit.

Andrew Stunell: My hon. Friend makes a very good point. For some rural areas, especially tourist-focused ones, a significant fraction of the housing stock may be occupied—or perhaps unoccupied—as second homes, which makes it very difficult for those who live and work in the areas to secure accommodation. I am sure he has taken note of our changes to the second home
	discount provisions, which give local authorities in those areas the opportunity to bring their council tax bills up to 100%. His new clause proposes a premium on top of that. I am sure that, in the years ahead, he and I will work jointly on proposals for a Liberal Democrat Government beyond 2015, and I look forward to working with him on that proposition.

Nick Raynsford: I draw attention to my interests as declared in the register.
	This is a shocking example of how not to legislate. It is three months and 21 days since we completed a rushed Committee stage on the Floor of the House, and during that time, the Government have sat on their hands. Why, during that period, did we not have proper time to discuss the Bill’s very serious implications? Why did the Government not use it to publish the draft regulations that the Minister promised in the debate on 31 January? I remind him what he said:
	“I recognise, of course, that local authorities and suppliers need as much information as possible as soon as possible. For that reason, we intend to publish draft regulations while the Bill is still before the House.”
	My right hon. Friend the Member for Wentworth and Dearne (John Healey) sharply picked up on that and asked the Minister whether he meant
	“this House or the other House”.
	The Minister replied:
	“I am looking for a nod somewhere”—
	he was clearly in need of guidance—
	“but let us stick with this House.”—[Official Report, 31 January 2012; Vol. 539, c. 777.]
	That was his commitment on 31 January 2012. As I said, three months and 21 days later, we still do not have the draft regulations. The Government, belatedly and to cover their embarrassment, pushed out a series of positioning papers on 17 May—four days before this debate—rightly provoking anger and criticism in local government that it had not been given time to consider the detail far enough in advance of today’s Report stage to issue briefings. We had the worst possible example of the Government rushing the Committee stage, preventing proper scrutiny. I remember well the lack of detailed scrutiny, with a number of amendments simply not being called because of the lack of time. The Government then did nothing for three months and 21 days, and now they have come to this House without draft regulations. They should be deeply ashamed of themselves and should apologise to the House for the shambles they have made of introducing this legislation.

Nick Raynsford: My hon. Friend is absolutely right: this measure is not about reforming the benefits system or creating a benefit; it is about imposing crude cuts in expenditure either on individual recipients or on local authorities. It is about the Government passing the buck, putting the responsibility and blame elsewhere.
	Let us look at the timetable. We know how many tasks are involved if a local authority is properly to introduce its own local scheme of council tax benefit next April. What will a local authority have to do? It will first have to consider in detail the implications of the regulations—it has to know what law it has to comply with. Over the last year or so we have heard about various aspirations from the Government. We heard the Minister say that no pensioner should lose; we have also heard the aspiration that there should not be any work disincentives. How those two are compatible we have never had explained to us. If we have a benefit that goes to a substantial number of pensioners and a substantial number of people in low-paid work, and if we exempt one of those groups from any losses and then announce a 10% cut overall, the other group has to face that loss by definition. It is, I am afraid, a simple piece of logic. The Government have not come forward with any explanation of how the aspiration that there should be no work disincentives can possibly be achieved. It is the most flabbergasting case of what George Orwell would have described as “doublethink”.
	The first task of local authorities, when they have seen the regulations, will therefore be to consider the implications. Then they will have to devise a draft scheme, taking account of the needs of the area and local aspirations. Many people in this House support the concept of localisation, but want it done properly. That would require local authorities to have the opportunity to consider what the best shape of a local council tax benefit scheme would be for it to respond to the needs of the area. Having done that, they should consult, which we all know is part of good administration. Consulting the considerable numbers of people affected is not trivial—we are talking about 6 million households nationally, which means tens of thousands in every local authority area. After a proper consultation, whereby individuals will know the likely implications, local authorities should finalise their schemes and then brief their IT suppliers to produce the software necessary to administer them.
	Ministers are seriously suggesting that local authorities should conduct that particular process in a matter of little more than eight months, because January next year is the cut-off date by which the benefits scheme has to be finalised. What world are they living in? What experience do they have of implementing complex changes in benefits? If they had any real-world experience, they would immediately realise that they have set local authorities an impossible task.
	What makes this sinister is the fact that we know what the Government expect to happen. They know that local authorities will probably respond by saying, “This is too difficult, so we had better take the hit ourselves. We will take the cost of the reduction in subsidy and absorb it into our own budget to avoid upsetting too many of our local residents by imposing harsh cuts on them.” That, we know, is the reality. As I said earlier, that is why the Government are guilty of
	trying to offload this £500 million package of cuts either on recipients or on local authorities. That is why amendments 6, 7, 10 and 13 seek to get the Government off the hook by delaying implementation for 12 months to allow proper consideration and a proper orderly transition so that implementation will not lead to the problems I have described.
	There is no logical case against that course. The Select Committee was adamant when it looked at the problem, and it recommended that the Government should delay. Local authorities are all backing these amendments, so why will the Government not accept them? We have heard the feeble excuse offered once again by the Minister, “Oh, it’s due to cuts. We can’t do anything else because of cuts.” I am sorry to say that this is not a Government looking intelligently or carefully at how to make savings without causing difficulties and hardship; rather, they are simply trying to offload these problems.
	There is one other consideration to which the Government should give some thought, and I suspect some local authority lawyers are already giving thought to it. If it is impossible for local authorities to administer the scheme in a way that makes the savings by reducing benefits, and they conclude that they have to absorb the costs themselves, this amounts to a new burden imposed by the Government. Under the new burdens doctrine, Governments have said repeatedly—and this Government have repeated it—that they should cover any additional costs imposed on local government that result from Government decision.
	I therefore advise Ministers to think a bit more about the implications of their new burdens doctrine. The Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill), who, when in opposition, was only too keen to talk about new burdens and to attack the Labour Government of the time for not honouring the new burdens doctrine, would do better if he now ensured that his own Government followed the words he used then. It is an interesting case of someone changing their tack once they find themselves on the Treasury Benches—briefly, I suspect, in his case. [Interruption.] This is not a unique or personal sleight to the Under-Secretary, as I would apply it to the entire Government Bench.
	Amendment 9 seeks to impose an obligation whereby councils, in devising their local scheme, should inform recipients in advance of what the impact will be “on their living standards”. This is a fairly straightforward and sensible proposal to make people aware of what the local authority is proposing. It was suggested for that reason, and I would have thought that any reasonable Government would support it.
	Amendments 11 and 12 deal with the default scheme that the Government are going to produce. Amendment 11 simply confirms what the Under-Secretary of State for Communities and Local Government, the hon. Member for Hazel Grove (Andrew Stunell) has said he intends—that there should be no pensioner losers. It is extraordinary, therefore, that he is so reluctant to accept it. He says that it is not necessary. However, because we know that so many Government pledges unfortunately prove worthless, we would rather have this on the statute book than in the form of a ministerial assurance, and we will draw our own conclusions from his refusal to accept the amendment.
	Amendment 12 concerns transitional protection. If the Minister argues that there will be no losses under the Government’s default scheme, his argument will suggest that there is no need for such protection. The amendment would ensure that if losses are implicit in the default scheme, the scheme must include the transitional protection that is proposed. That is an entirely reasonable and logical formulation, and I am surprised that the Government are reluctant to accept it.
	This series of badly thought out proposals will cause widespread hardship and serious financial difficulty to local authorities, and it is being rushed through a way that will make it difficult to implement properly. It is a sad and sorry saga, and I find it regrettable that the Government have not the realism and the sense of respectability to admit that they have made a serious mistake. They have got themselves into a difficult mess, and the only honest thing that they can, and should, do now is agree to the amendments that would defer implementation until 2014. That would provide time for the issues to be considered seriously and properly by all involved, and would enable the Government to escape from this mess.

Kevan Jones: As my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) pointed out, the Bill has not changed greatly since we last debated it. The underlying theme remains. As the Minister made clear, it has nothing to do with reform or enabling councils to implement a local scheme; it is actually about the Government’s deficit reduction targets. That is why they are so keen to aim for implementation in 2014.
	The Minister seems to think—and I recall that the hon. Member for Mid Dorset and North Poole (Annette Brooke) said this during our last debate—that all local authorities are on a level playing field, but they are clearly not. The Minister suggested that, following the 10% cut in council tax benefit, councils could make up the difference if they wished to, which may be all well and good for councils in areas where the benefit is being increased. I hate to return to my favourite example of Wokingham, but a few weeks ago a very good article in the Financial Times stated that its budget was rising by 3%—unlike the budgets of authorities such as Durham, which are declining by as much as 15%.
	We are not dealing with level playing fields; we are dealing with a strategy that the Government have worked out quite well. As we can see from the playbook according to which the Conservative part of the coalition is working, it is nothing new. The same strategy was adopted by the Conservatives in Canada in the 1990s. They made savage cuts in public services and devolved decision-making to local level: in their case, federal level. What they were saying was “We are giving you freedoms, but we are ensuring that you take all the blame for the cuts.” The flexibility that councils will be given will, in fact, cause them great difficulty, unless they are in Wokingham.
	That very good article in the Financial Times, published on 7 May, was headed “The well-to-do towns that austerity forgot”. I think that it is worth looking at, and not just because it makes plain that the Government are rewarding their own councils while penalising poor areas. Let us look at the calculations for Wokingham. It is among the 8% of local authority areas—out of a total of 152—that are expecting a real increase in local
	government spending over the period set out by the Government. Meanwhile, 20% of councils, including Durham, are taking cuts in excess of 15%.
	We are being told that we are all in this together and that what is being done is fair, but let us look at the difference between Wokingham and Wigan. In the index of multiple-deprivation, Wokingham scores 5.5 whereas Wigan scores 26. On average, there is an additional 1% increase in local government spending cuts between 2009-10 and 2011-12. Not only are local authorities in the north-east and other deprived areas suffering because their grants are being cut, but they are now going to be hit again by the council tax benefit cut. Local authorities will be told they are being given the flexibility to administer the scheme, but the result will be a 10% cut.

Kevan Jones: I agree. My right hon. Friend’s authority and mine are among the authorities that are having to take £152 million out of the budget over the next four years. In Wokingham, however, the council is planning to overhaul its town centre at a cost of £30 million, and it is not closing its libraries and its voluntary sector groups have not lost their funding. In communities such as mine and that of my right hon. Friend, councils are having to find savings—and they are having to find them in areas such as libraries and non-statutory services.
	In Durham, the bulk of expenditure goes on adult social care. The Labour-run local authority is rightly making sure the most vulnerable are protected, but that restricts where savings in the budget can be made. I send a clear message to the Liberal Democrats sitting on Durham county council that, as a result of their Ministers’ actions and their Members’ votes on this Bill, Durham and other local authorities are having to make savage cuts. The idea that they can be found simply through efficiencies is complete nonsense. No organisation could reduce expenditure so much without affecting front-line services.

Kevan Jones: I do not know whether the hon. Gentleman is old enough to remember records—I think he is—but if he does he will remember that trying to play a broken record is very difficult. The rhetoric from the election, when the Government blamed everything, including the world recession, on the Labour party, has now become a broken record. We are now into another recession in this country that was of this Government’s making. It is interesting that the Chancellor of the Exchequer now argues that the British economy is not doing well because of the eurozone. In 2008, 2009 and 2010, when the banking crisis hit, it was all Labour’s fault: now it is all Europe’s fault. The only people who are not accepting any responsibility are this coalition Government.
	Was our borrowing in 2008 and 2009 the right thing to do? Yes, it was. It was the right thing to do to ensure a growing and stable economy. We do not have that now; we have a recession that has been made in Downing street by this coalition Government. The idea that the fair way of dealing with that is to reduce the top rate of income tax so that it will, through Reaganomics, trickle down to boost the economy is complete nonsense. We have also heard complete nonsense this afternoon that
	the way to get growth is to slash employment rights. The Government are living in cloud cuckoo land if they think that that will not have an effect on local people.
	I was in local government for about 11 years, and I know that if a Government tinker with the system only to get it wrong they pay for it dearly. I remember the Conservative Government getting the poll tax wrong. Even when it was quite evident that it was going to be complete chaos, they would not change their mind. We are trying to rush through a system that will affect some of the poorest people and the poorest councils, adding to the injustice about the skewed way in which the Government have rewarded their friends on councils in the south. We are setting local government an absolutely horrendous task. The idea that the system can somehow be changed tomorrow at the flick of a switch is complete nonsense and I hate to think of the sleepless nights these provisions will give local treasurers. The practicalities will have an effect on councils’ individual income while they try to work out the system.

Kevan Jones: My right hon. Friend makes a good point. Let me take my constituency as an example. Compared with April last year, 384 more people are unemployed. The figure represents nearly 7.2% of the population and shows no sign of decreasing. The demand will not be on the central pot but on the councils. If councils have the large pressures that we see in Durham and others, because of the number of children in care and adults with social needs, where will that money come from? We can add the 10% cut to those pressures, too.
	As for the chaos that the process will lead to, although some councils—certainly Wokingham—will be able to afford to absorb such a reduction to their budget, not many will be. The mechanics of putting the system in place will be very difficult. What will happen if, with the best of intentions and advice, the computer systems cannot be put in place? Where will a local council find its money? What will happen if a scheme is put in place that has teething problems that lead to mistakes? What will happen with appeals and with the process of dealing with the situation? There is no remedy at all.
	Chaos and uncertainty will be faced by many low-paid families in this country and they will not know how the change will affect them. That is why amendment 9, tabled by my right hon. Friend the Member for Greenwich and Woolwich, is right. It must be made crystal clear what the effect will be on individuals. I support my right hon. Friend’s amendment, but I think that it might be playing into the Government’s hands, as they will want to blame the local council—in my case, Durham—for what is happening. Councils need to make it very clear
	that responsibility for the cuts lies with this Conservative and Liberal Democrat coalition Government. If they do not do that, the tactics that the Conservatives are using and that the Liberal Democrats have sleepwalked into mean that local people will blame local councils.
	Local Liberal Democrat councillors in Durham, for example, are arguing against changes to library hours and to local leisure centres. They will sign petitions to their hearts’ content. Small equatorial rainforests are decimated for local Liberal Democrat copies of “Focus” that state that they are supporting decisions against such moves by Labour Durham county council. They are not explaining to the people, however, that their coalition with the Conservatives in government nationally is cutting the county council’s budget savagely while helping the leafy Wokinghams of this world. That is the message we must get across to people: these cuts and their effect on local services and on people’s income are down to the coalition Government.
	I reiterate what I have said before: not one single piece of the legislation that has such an effect could go through without the complicity and support of the Liberal Democrats. They must take as much of the blame for the pain and heartache coming the way of many people in County Durham over the next 12 months as the Conservatives and it is no good hiding behind the idea that County Durham has somehow been given the freedom to come up with this scheme.
	My other concern is the differentials between schemes. That will create particular problems in parts of London, where there is a transient population and people frequently move around. They understand the present scheme and know what is expected of them. Different schemes in operation in different boroughs will lead to chaos and confusion not only for individuals but for borough treasurers trying to keep track of what people earn.
	The Minister made it clear today that the measure is about deficit reduction. It is no great radical idea about devolving responsibility to local authorities, and no great victory for the Liberal Democrats who believe in the devolution of local decision making. If the scheme has been properly worked out, why can we not have a transitional scheme, as my right hon. Friend the Member for Greenwich and Woolwich suggested, so that the people and the councils affected have time to adjust? That would give some local authorities the stability that they will not get from the proposed scheme.
	I hate to say it, but, as my right hon. Friend said, in 12 months or less, we will say we told you so. The misery and heartache that will be created for some of the most vulnerable people in our society is shameful. That is to be expected of Conservatives, but not of Liberal Democrats. The Minister may say that according to his impact study, equality is taken into account, but it is not. The measure will affect some of the poorest in society, including many women, who will not be protected in any way. The only group to have been taken out of the system for electoral reasons is the elderly. Having borne the wrath resulting from the granny tax, the Government clearly did not want to upset the elderly by allowing the council tax benefit reduction to affect them.
	But the Government cannot have it both ways. They cannot say that they are devolving responsibility to local councils, and then tell local councils that they
	must take one section of society out of that scheme from day 1, along with a 10% cut. If it were genuine devolution, it would not have been so rushed, and if the Minister genuinely believed in devolving power, although I have never believed that Whitehall would want to give truly devolved powers to local authorities, there would be no ring-fencing. The Government are doing that because they know that the measure will be unpopular with a large section of the population who actually vote. That is the only reason why older people are excluded from the provision.
	A delay is needed, but the Minister let the cat out of the bag and said that the measure is nothing to do with local government finance, but is aimed at deficit reduction. The Opposition would enter into dialogue with the Government about genuine devolution and proper reform of local government finance, but they have shied away from the elephant in the room—the re-banding of council tax. Ministers will not go near that for fear of upsetting a lot of people. If there is going to be radical change in local government finance, it must include a review of council tax bandings. I am sorry if that scares members of my own Front-Bench team. Without that, the Bill is no more than a short-term measure to achieve savings, as the Minister admitted, as a means of deficit reduction.
	The strategy has clearly failed. We are now in a continuing double-dip recession, which this time will be blamed on the euro crisis. Why pay for that on the back of some of the poorest parts of the country? That is inexcusable in the Government’s approach to the Bill. Let us do away with the pretence that it is about reform. It is about deficit reduction and about hitting the poorest hardest. We need to remind people at local level that the decisions taken in this place by Conservatives and Liberal Democrats will take financial support from the poorest in our communities and some of the most hard-working families in this country.

John Healey: My hon. Friend makes clearly and succinctly the points he made earlier.
	I am concerned about the percentages, whether 16% or 19%, and the averages, such as the LGA’s calculation that non-pensioners are likely to lose, on average, £6 a week from the support they currently receive to help pay council tax. Percentages and averages and are one thing, but the family, household or individual—the one in eight people currently entitled to council tax benefit who are in work but do not earn enough to cover their council tax bills without help—will face a reduction of perhaps £10, £12 or £15 a week, at a time when other costs are being loaded on them and they are struggling to make ends meet. They will find such a difference really hard to deal with. I hope that we do not lose sight of the sort of pressure that the Bill and the changes the Government are making will put on many households, including many that are working hard and have an entitlement that they simply will not have under the new system.

John Healey: I wonder—are they unintended consequences? If they are, the degree of negligence in the legislation is unforgivable. If they we foreseen and have been calculated as part of the legislation, that speaks volumes about the “doublethink” and “doublespeak” that my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), quoting Orwell, talked about earlier.
	The Government are making a pious claim to be on the side of those who are struggling but who are trying to do the right thing by staying in work in order to support themselves and their families, but those people will find it much harder from next year as a result of the changes that are going ahead. In Rotherham, just over 2,600 people are in that position, in Barnsley, just over 2,200, and across South Yorkshire there are more than
	13,500 people in work who earn so little that they are entitled to support from us and others to help cover their council tax bills.

Nick Raynsford: I wholly concur with my right hon. Friend’s argument. Does not he, like me, think it extraordinary that the Government, when they first announced the proposals, said specifically that they intended the reduction not to create any work disincentives? That has now disappeared from the rhetoric—they appear to have forgotten that objective entirely. Given their overall approach and the rhetoric they are adopting in relation to other benefit changes, such as saying that they are on the side of people in work, is not it extraordinary that they are now explicitly accepting the fact that this measure will create serious work disincentives?

Helen Jones: My hon. Friend is quite right. We can go through every local authority in England and find the number of such people.
	It is not just people in work and on low wages who will be affected but disabled people deemed unable to seek work, carers, and part-time workers who do not even show up in the figures. An increasing number of people are being forced to seek part-time employment, and they will pay the price of the Government’s cuts.
	As my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) said, there is a form of “doublethink”. The Minister for Housing and Local Government told the Select Committee that people could be protected by
	“getting economic activity going so there are jobs.”
	The Government are prone to lecturing everybody on getting economic activity going. They lecture councils and the European Union, but the one set of people they do not seem to lecture is themselves. They have no plan for growth at all.
	Many people in receipt of council tax benefit are in work or not expected to seek work because of their circumstances. For them, the cut will depend not on their individual circumstances but on where they live and, crucially, how many pensioners there are in their local authority area. That varies hugely from one area to another. Claimants of non-working age make up 34% of the total in East Dorset. In Tower Hamlets, the figure is 68%.
	The benefit cut that people receive could vary between 13% and 25%. The worst thing about it is that it is entirely arbitrary, with no pretence of fairness whatever. In fact, in their recently published statements the Government have explicitly rejected the idea of taking into account the number of pensioners in a local authority area when setting the funding level. Many Government Members will have cause to regret that in future years.
	As some of the Opposition amendments point out, the new system will hit not only those in work or unable to work but those seeking work. The Government have been in such a rush to bring it in that they have failed to align it with universal credit, to which the Minister referred earlier. If they are so keen to have universal credit, they should have waited to align council tax benefit with it. Their own consultation document acknowledged the problem, stating:
	“There is a risk, however, that some of the advantages from the single Universal Credit taper…could be lost if there is a separate and overlapping withdrawal of council tax support through localised schemes. This would produce a marginal deduction rate higher than 76%”.
	If millionaires were having to put up with that, the Government would be rushing in to rescue them. What sort of Government include those warnings in the consultation and then ignore them? They are either incompetent or vicious—one or the other. [Interruption.] Both, somebody says, and I am beginning to think so.
	As we have seen with business rates, the areas in greatest need will be hit hardest. Let us take the impact on people in work as an example. In Liverpool, there are 6,570 people in work and receiving council tax benefit. In Durham, there are 5,810, in Birmingham a whopping 16,780 and in Hackney 7,910. Just down the road in the City of London, there are precisely 40. In Purbeck there are 580, in Runnymede there are 610 and in Wokingham—I could not pass up another chance to mention Wokingham —there are 780.
	This change is a triple whammy for the poorest areas. First, it will mean that local authorities with more people in work and receiving council tax benefit face a much bigger risk of default in their council tax collection. Secondly, it will make it much harder for them to mitigate the effect of the cut on people of working age. Thirdly, there will be a bigger impact on their local
	economy, because money will be taken from people who would otherwise go out and spend it. It will come as no surprise to my right hon. and hon. Friends to hear that the New Policy Institute estimates that five of the 10 hardest-hit local authorities will be among the top 10 most deprived in the country—Hackney, Newham, Liverpool, Islington and Knowsley.
	In the Liverpool city region, it is estimated that the Government’s proposals will result in cuts of 17.23% for those who are not pensioners. In Halton, a single person will have to find at least £179 more each year. In Sefton, which has a higher than average number of pensioners, a couple in a band A property will have to find an extra £226 a year. That is probably small change to Government Members, but to people who struggle to keep their heads above water—those who have to count every penny to get to the end of the week without getting into debt, and without being driven into the arms of the loan sharks who are on many of our estates and ready to button on to vulnerable people—it is the difference between surviving and not surviving.
	I sometimes wonder what Ministers know of that world. Have they ever stood in a supermarket watching people put things back because they cannot afford to pay for everything in the basket? Do they understand the struggle that some families have if a child needs a new pair of shoes? They know nothing of it, and they have no wish to understand it.

Helen Jones: My right hon. Friend is entirely right. [Interruption.] The Under-Secretary says that it is because they think the measures are right. Well, if I cannot appeal to their moral sense, let me try appealing to their economic sense. The poorest areas will have the biggest hit to their local economies. The 2010-11 figures show that a 10% cut will mean £10 million being taken out of Birmingham, £6.1 million out of Liverpool, £3 million out of Newham, £2.7 million out of Newcastle and £2.9 million out of Gateshead. By contrast, the prosperous local economies lose less. Runnymede will lose £454,000; Wokingham £518,000; Melton more than £246,000; and Hart £293,000; but—as we might expect with this Government, this is a big “but”—that is not the whole story.
	The figures I gave were calculated on payments made in 2010-11, as given in a parliamentary answer by the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate. The total paid to councils in Great Britain in that year in council tax benefit was £4.8 billion. In their consultation on funding, the Government promised to give 90% of the forecast council tax expenditure for 2013-14, but they expect council tax benefit to have miraculously decreased by then to a total of £4.2 billion.
	How did the Government arrive at that assumption? Considering unemployment levels and what is happening to the economy, we might expect council tax claims to
	go up rather than down. Perhaps that figure was calculated on the earlier optimistic forecasts that the Government gave us, but they have had to be adjusted. Councils should be warned, however, that they might face more than the cut they are expecting. Even with the so-called minor adjustments the Government want to introduce to the distribution of funding, and the creation of ceilings and floors, we do not expect too much difference. We have heard those promises before in local government finance settlements, and the measures still ended up hitting the poorest most.
	Moreover, if vulnerable people ought to have more protection, as the Under-Secretary of State for Communities and Local Government, the hon. Member for Hazel Grove appeared to suggest—I assume he was referring to those on passported benefits—the working poor could face cuts of up to 40% in their benefits, which wipes out any gains from the increase in personal allowances he trumpets. In fact, those gains have been wiped out already by rising VAT, the loss of tax credit, changes to housing benefits and so on.
	I know the Minister is anxious for good news—if the Labour party had lost to Professor Pingu the penguin, I would be looking for some good news—but his proposal will not run, because like most Lib Dem policies it is little more than a headline for the latest hocus-pocus. Indeed, far from councils being given more freedom, they will bear all the financial risks and most of the public anger for the policy. The Government have carefully ensured that the increased bills dropping through doors will bear the imprint of the local council, not that of the Secretary of State. Councils will pay the price if it goes wrong. The Select Committee on Communities and Local Government called it
	“an illusion of delegation with a minimum of real discretion”.
	We know, for instance, that only between 57% and 66% of pensioners claim their benefit. The likelihood is that the number claiming the benefit will increase when it is shown as a discount on a bill rather than as a benefit. That is a good thing, but councils must bear the burden of the extra cost. Increased unemployment in a council area, especially from the closure of a large company, will mean that council tax benefit claims increase. What will happen then?
	The Government want to include council tax support in their business rate retention scheme, but what is the consequence of that? According to the Government’s consultation, a local authority will come into the safety net category only if its revenues fall by between 7.5% and 10% below the baseline, which is a massive fall before getting any support.
	This is the crux of the matter. The Government have said that the measure will inspire councils to create employment and get more people into jobs, but how do councils do that in a double-dip recession? The Government have an in-built belief that local authorities do not want to encourage economic growth, but I challenge the Minister to name one, as I have throughout debates on the Bill. I am willing to give way to him if he wants to name one, but he cannot do so. Local councils have not caused the double-dip recession; the Government have. It is not local authorities that are causing firms to go into administration, but the economic failure of the Chancellor, who seems to have been too busy entertaining Rebekah Brooks at Dorneywood to notice what is happening to the economy.
	The poorest areas are likely to face the greatest rise in claims and have already had their budgets cut. There is no slack in the system and no money to be transferred from elsewhere. The Opposition’s greatest fear is that some local authorities will try to manage the system by driving down claims and deterring people from claiming. I have confidence that Labour authorities will not do that—thankfully, there are many more Labour authorities than there were when debates on the Bill began—but I have little confidence in Tory and Lib Dem authorities. Equally, setting up an appeals system and dealing with what is likely to be a higher level of default will incur costs for local authorities.
	New clause 5 is designed to ensure that the Government cannot ignore those impacts. It is no good the Minister telling us that there will be reviews, because those reviews do not include people in work and in poverty or those looking for work and in poverty.

Helen Jones: Can the Minister explain what the position is when a person has not acted dishonestly? We have asked him several times. He has referred to acting knowingly and to acting dishonestly, but the his proposed provisions refer to offences that can be committed other than dishonestly.

‘At a date no later than three years from the implementation of this Act the Secretary of State shall prepare a report detailing the effects of these provisions on—
	(a) the number of people receiving council tax support in each local authority including the number in employment, the number actively seeking work, and the number of pensionable age, and
	(b) the costs incurred by each authority in running the scheme, including the cost of appeals.’.—(Helen Jones.)
	Brought up, and read the First time.
	Question put, That the clause be read a Second time:—
	The House divided:
	Ayes 201, Noes 271.

John Healey: I rise to speak to new clauses 1 and 11, and amendments 62 and 63.
	My purpose with new clause 1 is to encourage the Minister to confirm, on behalf of the Government, that the necessary powers exist in legislation to make tax increment financing work in future, and also to confirm Ministers’ intent and commitment to using those powers. The case for TIFs—tax increment financing schemes—is unarguable. I myself have been arguing it for a number of years, first in the Treasury and then in the Department for Communities and Local Government. There are local government regulations in Scotland to allow six TIF pilots to go ahead. The use of TIFs is widespread in Canada and the US, particularly in areas where regeneration is required; indeed, only one state in the US—Arizona—does not have TIF legislation. TIFs build on the commitment that Labour made in government, in the Budget 2010, a commitment that was backed by a capital down payment of £120 million.
	However, if the TIFs system is to work—that is, if local authorities are to borrow money for up-front infrastructure investment against the anticipated increase in business rate income as a result of the new infrastructure —there must above all be certainty for those long-term investments to be made. There needs to be certainty for a clear business plan and, then, an investment plan to be put in place, otherwise TIFs will not get off the ground and will not work. That certainty is required over a 20 to 30-year time scale, which is why it is needed in legislation. As the Centre for Cities said in response to the Government’s consultation:
	“When the Government introduces Tax Increment Financing…it should be based on ‘Option 2’—a ringfenced TIF which is best suited for local investment finance within the proposed business rate retention system.”
	That point was echoed by the British Property Federation, which said:
	“Failing to ring-fence the income stream for that length of time”—
	its submission referred to a 25 to 30-year period—
	“would generally render the upfront investment unbankable, because the risks associated with it become too difficult to model, understand and price. TIF will only work with the sort of total ring-fencing proposed under Option 2”.
	The Government made the commitment to ring-fencing, stating in the White Paper of October 2010:
	“We will introduce new borrowing powers to enable authorities to carry out Tax Increment Financing”.
	In response to the consultation, the Government also made a commitment to
	“allow a limited number of Tax Increment Financing Projects to be exempted from any levy and reset for 25 years.”
	That is the crucial commitment that I want to test against the content of the Bill before us. I expressed my concern about the freedom of the ring-fencing from any effects of reset to the Secretary of State on Second Reading on 10 January. He had no answer: either he did not know, or he did not want to say.
	Let me therefore point the Minister to the source of my concern, which relates to paragraph 37(1)(d) of schedule 1 on page 32. This deals with the regulation-making powers of the Secretary of State, referring to regulations that can
	“provide for that amount or that proportion to be disregarded for the purposes of calculations under any of the following provisions”—
	in other words, regulation-making powers that can lead to the disregard of a proportion of business rates in specified areas, namely TIF areas, for particular payments that would otherwise be due. The provision goes on to identify payments to the central share, payments by billing to precepting local authorities, levy payments, safety net payments, payments on account and payments that follow from changes either to the local government finance report or to an amending report of a local government financing report. There is no power, however, to make regulations to exempt payments as a result of changes through a reset.
	If I am mistaken, I would like the Minister to indicate where that power lies. If no such provision exists in the legislation, will he confirm that the Government will honour the commitment they made in their response to the consultation and will amend the Bill so that any payments resulting from a reset can be disregarded—and disregarded in full—for the purpose of the TIF areas? The Minister would be welcome to accept my new clause if he needs to do so.

John Healey: Thank you, Mr Deputy Speaker. I got the gist. I welcome this Bill and I want it to work. My fear is that without the certainty around potential resets—we do not know when or how often they might happen; we do not know whether they will happen every 10 years; we do not know how they will work in future—there will be huge risk and uncertainty in the system. It is not a question of whether I am satisfied by the provision; it is a question of whether the potential investors, who will determine whether the TIFs work or not, are satisfied. I am trying to convey the sentiment that I have picked up from my discussions with banks, commercial organisations, the British Property Federation and some of the City’s policy experts, who all say, “Look, we require a ring fence; it must be total”. Thus leaving out the reset, which the Government promised they would not do, does not make sense if we want the provisions to work. I hope the Minister will be able to provide the confirmation we need and be able to build it into the Bill. This issue will certainly need to be confirmed at later stages of the Bill.
	Amendment 62 is designed to get to the heart of the relative share of the business rate take between central and local government. The figures for projected resource spending on local government under the current spending review demonstrate a significant reduction for next year and the year after that—of nearly half a billion between this year and the next, and of more than £1.5 billion between next year and the year after that in nominal
	terms. Alongside that, the projected yield from business rates is set to go up by nearly £1 billion next year and by more than half a billion the year after that. That means that the gap between the projected business rates yield and central Government’s commitment to resource spending on local government is more than £2 billion for next year, and £4 billion for the year after that. There is a significant and growing gap between the business rates yield and spending on local government.
	I accept, as do my colleagues on the Opposition Front Bench, the need for the business rates retention system not to undermine the Chancellor’s announced plans for deficit reduction during the current spending review period. However, I do not want central Government to keep helping themselves to a growing yield from business rates after 2014-15, given that the system is designed to return that yield to local government as an incentive for it to support economic development.

John Healey: Indeed. I have my misgivings about whether any approach to the reset procedure can make the system fair after more than a few years. Indeed, I am still to be convinced that the system can be reset in a fair and proper way. But, Mr Deputy Speaker, I digress beyond the scope of the amendments that I tabled.
	Let me now turn to amendment 63. During earlier debates on the Bill in the Chamber, I argued that this was an unsuitable system for long-term Government funding. Ultimately, business rates yield is too volatile, and it is too volatile on a year-by-year basis. Let me give three examples, a couple of which will be close to home for those on both Front Benches.
	In Warrington the business rates yield has dropped by £10 million over the last 10 years, from £53 million to just £43 million. In Sunderland there was a £17 million drop between 2010 and 2011, and in the year before that there had been a £12 million rise. I can tell the Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill), that in the middle of 2005-06, the business rates income in his borough of Bromley halved. In two of the last four years, the changes—up and down, and up and down again—have amounted to more than 10%. The funding stream is inherently volatile, and, in my view, is inherently unsuitable as a basis for the funding of essential local government services.
	The main purpose of amendment 63, however, is to draw attention to concern about the volatility caused by appeals. I believe that areas in which there is a particular concentration of a single or consistent business type are particularly vulnerable to a big impact from them. The hon. Member for Cities of London and Westminster (Mark Field), who has just left the Chamber, may recall that in 2007-08, a full 20% of the business rates yield of
	the City of London was lost as a result of successful backdated appeals. So the appeals add another important, volatile element to the system of business rates.
	Those appeals are made against decisions by the Valuation Office Agency, not local authorities. The system is managed by the VOA and tribunals, not the local authority, and it brings benefits to the companies that are successful, not the local authorities. We must ensure that the impacts of appeals do not affect the funding base of the local authorities; we must not expose authorities to vagaries in the system and to the impact of appeals, when they cannot predict them, control the risk of them or benefit from them. Actually, neither can they benefit from business rate increases through revaluation, at least while the Government put in place transition relief.
	I tabled amendment 63 because the Government are creating a one-way bet, in which the Chancellor wins each way and the councils lose each time. If the appeals are won by the company, the local authority has to manage the volatility and has to bear the loss up to the level of the safety net threshold—which, according to the statement of intent in the Government’s publications of Thursday last week, is likely to be somewhere between 7.5% and 10%. Amendment 63 is an attempt to make sure that once the calculations and the thresholds are determined, safety net payments take full account of rating appeals. Linked to that, I hope the Government will accept the case for fully compensating local authorities from the levy pot for the impact of any successful business appeals—over which they have no control, and which they cannot predict.
	New clause 11 is relatively modest, and I hope the Minister will accept it in principle, if not in practice at this stage. The power for setting and changing business rates policy—business rate reliefs, which are mandatory, as well as the payment schedules for business rates and the transition periods for business rate increases—will continue to rest with the Secretary of State and the national Government. Currently, any national business rate policy changes have no direct impact on local authority finances or local authority budgets. In future they will, however. They will not be local government decisions, but they will create consequences that local government will have to deal with. If the Government decide to change the rate or the type of mandatory rate reliefs, or to allow the deferral of part of the change in business rate bills, that will have a direct impact on that year’s yield in the area concerned, and therefore on the local authority’s funding. Local authorities will be hit by the consequences of decisions that they did not make and that they cannot control. That is unfair and unreasonable.
	It may surprise some Members to learn that the Federation of Small Businesses has also made that argument. It said in response to the consultation of October 2011 that
	“the FSB is concerned that the incentive system could actually deter local authorities from promoting and utilising the reliefs available to small businesses such as small business rate relief, rural rate relief and hardship relief…It would mean that a local authority would lose out on income if it increased the proportion of businesses that received rate relief or would make money if the number of businesses able to get reliefs fell.”
	I am sure the Minister does not want to design into the new system perverse incentives that will hit small firms in that way.
	As currently proposed, the new system will be bad for local authorities, and could be bad for local small and medium-sized firms. My new clause requires that, at the very least, the Secretary of State must consult the parties that would be affected by changes in national business rates policy before making such decisions. Under the new system, the stakes for councils will be higher, so the guarantee to consult them before any changes are made is the minimum that Ministers should promise.

Helen Jones: My hon. Friend is right about that, and I shall discuss the number of people in care later. It is important that we recognise that many of the things we are discussing are statutory services, which the local authority has to provide.
	Let us examine some of the differences between areas. In Knowsley, whose case was put forcefully in Committee by my right hon. Friend the Member for Knowsley (Mr Howarth), 58,000 people—more than one third—live in areas that are among the top five most deprived in the country. In the north-east, 32.7% of people live in the most deprived 20% of areas. Those are the areas that will struggle as the gap between needs and resources widens. Such authorities are often the same ones that are having to cope with the biggest increases in unemployment. That both reduces the finance available to local councils, because more people are claiming benefit, and increases the demand for their services.
	The Secretary of State seems to think that authorities are competing to be the most deprived, so let me ask him something—I would if he were here, but he seems to take these debates so lightly that he has not even bothered to turn for most of this one. So let me ask this Minister: is unemployment in Birmingham, Ladywood higher or lower than in Henley? In Birmingham, Ladywood, it stands at 11.2%, whereas in Henley it is 1.1%.
	Does Middlesbrough have a higher or lower unemployment rate than North East Hampshire? Middlesbrough’s rate is 9.7%, whereas that for North East Hampshire is 1.1%. Is the figure for Liverpool, Walton higher or lower than that for Wokingham? The figure for Liverpool, Walton is 8.5%, whereas that for Wokingham is 1.3%. Does he think that councils are making this up and deliberately causing unemployment to get Government grants? Not even he could get up to argue that. It is not local councils that have caused this recession, yet still we hear from Government Members that councils are “reluctant” to promote economic growth.
	Coming from this Government that is a bit like King Herod accusing someone of child cruelty. Local authorities are still having to cope with the long-term legacy of heavy industry, followed by de-industrialisation.

Helen Jones: My hon. Friend is quite right. In the first place, we could ensure that we address those legacies of ill health and poverty, which create a greater demand for services and mean that fewer people are able to contribute to them. For example, why does Durham council need to spend more on older people than a similarly sized council such as Surrey? It is not because it is profligate, but because it has higher deprivation and ill health, which lead to greater demand for home care services but mean that fewer people are able to finance that care. Fifteen times as many people receive a community service in Durham than in Surrey and two and a half times more receive a home care service. That demonstrates the huge variation in need across the country.
	Those levels do not bear any relation to an authority’s ability to generate income. In Surrey, for example, 75% of the properties are in band D or above. Surrey can generate more income from band D council tax than a similarly sized authority, which is a point that was made earlier. Unless those factors are taken into account in any financial settlement, there is a huge risk to services for those in need.
	A similar combination of need and a more difficult local economic situation can be seen in Halton, my neighbouring authority. One in five people in Halton has a limiting long-term illness, yet its ability to benefit from increased economic growth is more limited than that of other authorities for one simple reason: 22.3% of its business property already has an empty rating assessment, and even if it were all brought back into use it would generate little by way of extra income. The same is true of Liverpool and other big cities, where so much spare capacity exists that even if an extra 15,000 jobs were created, they would get no additional business rate income. When the Government insist that councils concentrate on increasing commercial floor space, the problem is that those who have surplus capacity find things increasingly difficult.

Helen Jones: My hon. Friend is quite right and that is true in many urban conurbations, such as Manchester and London, for example.
	Let us also consider the need for children’s services. Levels of child poverty, and thus the demand for services, vary hugely between authorities. In Hartlepool, 29% of children are in poverty. In Newcastle, the figure is 27%, as it is in Liverpool. That is 91,000 children. I could not resist looking at that often mentioned authority, Wokingham, where the level of child poverty is 7%. Which area has the most need for services, yet which is benefiting most and is likely to benefit more from this Government’s plans?
	Such high levels of child poverty mean a higher demand for children’s services. In Liverpool, for example, 77% of the children in poverty are in single-parent families, meaning there is an even greater need for child care and support for families to help parents go to work, as well as for other support. Children in those areas need better service, not worse, and they need more help. There is no point in the Deputy Prime Minister’s banging on about the need to address inequalities in education unless the Government recognise that to make a real difference those inequalities must be tackled before children get to school.
	So, we have places such as Middlesbrough—the hon. Member for St Austell and Newquay (Stephen Gilbert) is shaking his head, but anyone in education knows that to make a real difference to educational attainment we need to tackle the inequalities before the children reach the age of five. By the time they get to school, those inequalities are entrenched and, if he does not think that that is true, I suggest he asks some teachers.
	Middlesbrough is the ninth most deprived local authority in England and has seven times as many children receiving free school meals as Wokingham does. It clearly needs greater investment in children’s services. Poverty also drives the number of children being taken into care. We spoke earlier in the passage of the Bill about the huge increase in the number of referrals and children taken into care following the case of baby Peter, but the differences between authorities are stark. There was a 10% increase nationally in safeguarding referrals in the period around 2009-10, but in Liverpool the increase was 60%. Those are the differences that we are dealing with. The same applies to the numbers of looked-after children—children for whom the authority has a legal obligation to be the corporate parent and to provide. It cannot cut those services, it cannot trim them and it cannot decide how great the demand is.

Helen Jones: I could not have put it better than did my hon. Friend. These services are demand-led; they are not within the control of the local authority, and they are, as he said, very expensive to provide, as they
	must be. We are dealing with some extremely damaged and vulnerable children in local authority care. Surrey has 32 looked-after children per 10,000 of population, and Wokingham has 22, compared with 104 per 10,000 in Middlesbrough and 100 per 10,000 in Newcastle. That is a stark example of the differing levels of need between local authorities, and the idea that those services should be left to the vagaries of the market is breathtaking.
	My right hon. Friend the Member for Wentworth and Dearne, who is no longer in his place, gave some good examples of how business rates can vary from year to year. It is entirely unpredictable, yet this Government still refuse to recognise those different levels of need within local authorities.

Pat Glass: Perhaps it is sign of the complexity of the subject and the fact that we have not exactly taken the nation with us that there are so few Members in the Chamber tonight to discuss local government funding. We ought to remember that local government funding underpins local authority services, which support our most vulnerable people—the elderly and the disabled—and that it is women who are the heaviest users of local authority services and who are hardest hit when services are cut or funding is changed. Any changes to local authority funding need to be considered carefully and time must be taken to ensure that all intended and unintended consequences are known before those changes are made, not after, but adequate time and proper consideration are precisely what the Government’s proposals are lacking.
	We heard only this morning that nine of the 10 poorest areas in the country are in the north-west, and the 10th is in the north-east. We know that Government cuts to local authority funding have already led to every person in the average north-west local authority losing £133. Every person in my local authority has lost £70, yet every person in deepest deprived Surrey has gained £2.
	Because of the complexities of local government funding, even slight changes in one area often have major impacts elsewhere. We are beginning to see clear evidence that the pupil premium, although well intended, is responsible for a shift in funding from the poorest areas to the most affluent, and from schools with high concentrations of children on free school meals to schools with lower concentrations of those children. The Government have already signalled their intention to shift health funding away from need and deprivation and towards the elderly population. That will have an impact on areas such as mine that have high concentrations of people who, because of our industrial heritage, are in need of health provision and live in deprivation, because the funding will be transferred to areas in the south where the more affluent and the elderly live.
	Now the Government propose changing business rates, which will simply carry on their work of siphoning funding from the poorest areas to the most affluent. Those policies on business rates are not new or untried; they were used in the USA in the 1990s and resulted in cities such as Detroit and New Orleans becoming derelict cities, because everyone who could move out did so and left the cities to the poorest and most vulnerable. The Government’s proposals on business rates take absolutely no account of the ability of individual local authorities to raise rates without the support of the Government.
	The Government’s proposals also take no account of geography. Any area that is not within the golden triangle of south-east England, northern France and Germany needs the support of Government infrastructure to attract businesses and business rates. We have heard tonight how, as a result of these proposals, the City of London will see cash growth of almost 140% over four years, yet places such as Liverpool, Knowsley, Bury, Wirral and south Tyneside will see cash growth over the same period of about 20%.
	The Government’s proposals take no account of the number of children living in poverty in a local authority or the number in need of local authority care and protection. They take no account of the number of elderly poor, the quality of housing or the number of people living in substandard housing or with chronic ill health. They do not take account of what local authorities need to spend; only of what they can raise.
	I am asking the Government to agree to carry out and publish an independent assessment of the needs of different local authorities before deciding how much of their business rate they can keep. Local authority funding formulae are complex and any review must be properly handled and carefully considered. I know that the Government do not do detail, but that is what local authority funding formulae are all about. If they get the detail wrong, they will cause chaos for our most vulnerable people.
	I remember that some years ago the previous Government were levering additional funding for schools, but the schools were saying that they were not getting it.
	Treasury civil servants initially pointed the finger at local authorities and said that they were creaming off the money. There was naming and shaming of local authorities, which came out very firmly and screamed that they were not creaming off the money. The civil servants looked again and then pointed the finger at special educational needs, saying that the growth in the SEN sector and its increasing cost was draining money that had been meant for the schools. A proper review found that it was not special educational needs, but a Treasury anorak—
	[
	Interruption.
	]
	I am sorry, but Ministers should listen to this, because it is important. It was a Treasury anorak who tweaked the system in one area and caused a Mexican wave in another. Local authority funding is complex. If the Government do not take the time to consider it properly, the most vulnerable people in our society will be the most affected.

Bob Neill: Compared with formula grant that the Labour Government left behind, yes I do. That view was shared by the Lyons inquiry, which the previous Government very conveniently buried because it did not suit their purposes.
	Might I now turn, Mr Deputy Speaker, specifically to the two sets of amendments and new clauses before us? I am sorry that the right hon. Member for Wentworth and Dearne (John Healey) is not in his place, because he made a thoughtful and well considered speech. I had the pleasure of shadowing him for a time and I respect his concern about the matter, so in fairness to his arguments, I will deal with the points he made.
	New clause 1 relates to the operation of set-aside and the position of tax increment financing schemes—TIFs. The Government are committed to making TIFs option 2, which is what we are talking about, successful. I am glad to learn that when he was in government the right
	hon. Gentleman was an advocate of TIFs. He was not, unfortunately, able to persuade those further up the governmental pay scale to introduce them, but I do not doubt that he tried hard. This Government are doing what everybody asked and succeeding in introducing them. He is quite right that for TIFs to operate properly there has to be a degree of certainty, but the change he proposes is not necessary because the provisions in the Bill already enable that to happen.
	The Government’s intention, as indicated in the White Paper, is that a ring fence exempts TIFs from the calculations of the levy, the set-aside and any reset, and the Bill already permits that. We also intend that, under the system, the additional uplift in rates retained be disregarded when setting tariffs and top-ups not only in relation to the option 2 TIF scheme, but in respect of enterprise zones. That is why “proportion” is used in the regulations about which the right hon. Gentleman is concerned. The intention for TIFs is 100% ring-fencing, but in relation to enterprise zones, as hon. Members will know, the uplift in rates is retained from a starting point, so there is a proportion. The wording is used simply to cover both types of scheme and to enable both to be ring-fenced.

Bob Neill: I think that the right hon. Gentleman will have to make do with a potted version given that I have only 10 minutes left and want to deal with other points as well. Suffice it to say that if he casts his eye over paragraph 37(1)(d)(iv) and (vi) of part 10 of new schedule 7B to the Local Government Finance Act 1988 —I know that he will want to do detail as we wish to do detail—he will see that the regulations permit those uplifts to be disregarded.
	Those provisions have the same effect as the new clause tabled by the right hon. Member for Wentworth and Dearne would have. The Government have said that it is not our intention to reset the system until 2020, save in exceptional circumstances. I accept that for option 2 TIFs it may well be desirable to have a longer period than that, and the regulations will permit that. Enterprise zones and option 2 TIFs will be disregarded at the reset and could be disregarded for subsequent periods. It will therefore be convenient to align future resets with the revaluation period from 2015 onwards. The system will work perfectly well in practice.
	In amendments 62 and 63, the right hon. Member for Wentworth and Dearne fairly recognises that central Government have, and always will have, an interest in public spending. It is unrealistic to think that central Government would not have a macro-economic view on the overall level of control over local government, and
	that is why we could not accept his amendment and constrain ourselves in the way that is intended. However, we have always made it clear that, over time and particularly once we have the public finances back on track, we hope to increase the proportion of business rates that are part of the rates retention scheme. We are starting at 50%, which is a considerable step forward in giving local authorities greater financial autonomy, and the provisions in the Bill allow the figure to be increased if circumstances permit. Equally, however, one has to be realistic and recognise that in an economically difficult world it would be imprudent to presuppose that the central share could be removed altogether. I do not think that any Government would envisage that. It is conceivable that in dire circumstances the share could be increased, but that is certainly not the Government’s intention; we intend to reduce it as soon as economic circumstances permit. It is therefore appropriate to maintain the existing provisions, which enable the alterations in shares between local and central Government to be considered alongside the need to maintain affordability and to protect the interests of the taxpayer and the wider economy. Whatever the proportion, be it 50% or higher, I repeat the assurance that, as is consistent with the 1988 Act, it remains the case that business rates paid to central Government through the central share will be returned to local government through other grants.
	On amendment 63, we are alive to the point that the right hon. Member for Wentworth and Dearne makes, and we will take it on board when drafting final regulations. We are conscious of the potential interaction of the incentive with loss of revenue at appeals, and we have said that we will consult further on that during the summer. We have already scheduled meetings between officials and local authority officials. Against that background, I hope that the he will feel able, albeit in absentia, to withdraw his amendment.
	Let me turn to new clause 6 and the related proposals from Opposition Front Benchers. I could not help but note a slightly different tone in the debate when we discussed them. I think that earlier the hon. Member for North Durham (Mr Jones) alluded to one-tune records. With respect to the hon. Member for Warrington North (Helen Jones), a one-tune record is still a one-tune record however long you play it, and I am afraid that that is what we heard from the Opposition Front Bench. It is also, I am sorry to say, a rather inaccurate one-tune record, because when one analyses the hon. Lady’s argument, one sees that it is not only a serious indictment of the system that we inherited from the Labour Government but does not accurately portray what we are seeking to do. It is a serious indictment of the Labour Government’s record because the list of undoubted differences and inequalities between regions in the UK that she set out is in some measure, if she will forgive my saying so, the legacy of the failed, highly centralist policies of the Labour Government. It is pretty scandalous that after 13 years of regional policy and of a highly centralised local government finance system, the inequalities to which she referred exist. That is what Labour left behind.
	The coalition has sought to address that legacy, even within the existing system. First, we have increased the weighting given to the needs element of the formula grant, which precisely reflects those issues, from 73% to
	83%—something that no previous Government have done. Secondly, we have introduced transitional grant to deal with authorities in the greatest difficulty.
	It is worth bearing in mind that need is built into the calculations in the business rate retention system. Need is part of the calculation of the baseline because the needs element is part of the formula grant, and we have indicated that we will take the 2012-13 formula grant as the baseline. The hon. Lady’s examples of the undoubted cost pressures in social services, child care and so on are, therefore, reflected in the social services element of the formula grant that we have maintained, as well as in the uplift of the needs element that we have maintained. We have placed such authorities in a better position for the starting line.
	There are undoubtedly significant and sensitive services that are under pressure. Reference has been made to some of the child care cases that we know about. Those are really tough areas with real cost pressures, but under our system top-tier authorities in two-tier areas, which make up the majority of the authorities that are responsible for adult social care and children’s services, will be designated as top-up authorities. That means that they will be protected from volatility more than any other authorities in the system. They know that their top-up will be fixed for the reset period and index-linked thereafter to the retail prices index. There is particular protection in our system for authorities with the greatest need. The thrust of the Opposition proposals therefore falls at the first point.
	We have said that we will share the proceeds and the risks through the 50:50 split between local and central Government. We have said that the baseline will take into account the issues that we have taken on board. We have said that baseline funding will remain fixed and that growth in budgets will be linked to local business rates growth thereafter, but with protections in place. Opposition Front Benchers have shown a schizophrenic attitude to the Bill from start to finish. They have played lip service to a degree of localism, and they have given examples of over-centralisation that, on analysis, turn out to be the legacy of their own system. They have been in denial throughout about the need to link reform of the local government system with a realistic appraisal of the need to reduce the deficit. They have produced a set of arguments about as dysfunctional as one could find, making them the Simpson family of British politics. We have heard no credible alternatives. They have played the same record time and time again, and they do not have much credibility. I hope that the House will resist the Opposition proposals if they are pressed.

‘(1) In determining the central share and the local share for any relevant authority, the Secretary of State must have regard to—
	(a) the level of need in that authority, and
	(b) the likely capacity of the authority to benefit from business rate growth.
	(2) Any assessment of the level of need shall include—
	(a) the ranking of the local authority in the Index of Multiple Deprivation,
	(b) the level of unemployment within the authority’s area,
	(c) the proportion of adults within the authority’s area who have a limiting long-term illness,
	(d) the number of adults within the area who are in receipt of social care,
	(e) the number of looked-after children within the authority, and
	(f) the level of child poverty within the authority’s area.
	(3) The Secretary of State must lay his assessment before the House at the same time as the Local Government Finance Report.’.—(Helen Jones.)
	Brought up, and read the First time.
	Question put, That the clause be read a Second time.
	The House divided:
	Ayes 202, Noes 275.

Bob Neill: I beg to move, That the Bill be now read the Third time.
	This is a bit like coming out in the play-off final after the brief half-time break at Wembley on Saturday. We just need a little bit more to close the deal as far as this Bill is concerned—[ Interruption. ] It did not have to go to penalties.
	We have had a lengthy and sometimes constructive debate during the Bill’s progress through the House, and it is worth taking stock now. The House has the opportunity to make a considerable game shift in the relationship between central and local government. We are now in a position to move away from what has been, on any independent view—as consistently endorsed by independent experts, going back to Layfield, the Lyons inquiry and the resource review—the unhealthy level of dependence of local government on central Government for income that has accrued over the years. As part of the Government’s localism agenda, we intend to hand back power to local people and the authorities that represent them. I hope that that principle will be recognised by hon. Members on both sides of the House.
	I shall set out what the Bill does and its wider context as part of the coalition’s localism agenda. It is recognised that giving greater local control over expenditure and revenue raising is desirable. The principle of business rates retention is therefore supported across the House. Once we drill under some of the rhetoric, there is also a general recognition that welfare spending needs to be brought under control, and that it is right that local authorities should have control over council tax support.
	The Bill incentivises local authorities to go for growth, because that is the other part of the agenda that the coalition regards as critical. We need to encourage sustainable growth and the Bill incentivises local authorities to grow their tax base by directly linking financial benefit to the decisions that they take on, for example, planning permissions that lead to more commercial floor space and economic activity, and in the design of their council tax support schemes that incentivise them to get claimants back into work, which is where we all want to see them wherever possible. It enables councils to decide how best to manage their contribution to reducing the deficit. All thoughtful commentators accept that a contribution must be made and that it is more likely to be nuanced and effectively delivered if there is local input into the design of that contribution.
	Local authorities will also be given the freedom to decide how to help provide for the most vulnerable in their communities. I hope that no one seriously thinks that any party has a monopoly on concern for vulnerable people in their communities. The Government regard the vulnerable as a top priority, and that is why we have increased the weighting given to the needs element of the formula grant in our financial settlements; why we have maintained that in the baseline; why we introduced transition grants; and why we will ensure that local authorities that deal with some of those areas of greatest cost pressure in relation to adult social care and children’s care will be designated as top-up authorities and will have a degree of certainty about their funding by index-linking and protection from volatility. That is a practical commitment to helping to protect the most vulnerable in society.
	The reforms are also part of our wider approach to supporting growth, which is our best hope of having the money that we need to support services for the vulnerable in a sustainable way; to get more people back into work; and to enable us to pay down the deficit, which at the moment ties the hands of central Government in seeking to deliver the services that we all want to see for our communities. We have made real progress on this front over the past two years. The Bill sets important incentives for business rate retention and helping people back into work through council tax support, but that is linked to other parts of the agenda. We are encouraging local authorities to build new homes, through the new homes bonus, an incentive for both commercial activity and domestic building. Homes as well as jobs are central to the incentives we are putting in place.
	The local enterprise partnerships are bringing together businesses and civic leaders to provide strong local leadership and to drive growth. My right hon. Friend the Secretary of State, I and all the Ministers involved in the legislation very much hope that the Bill will not only make technical changes but bring about an attitude change in the relationship between local government and their business communities. Many of our competitors have a much closer relationship between their local authorities and the big economic drivers, but that has not always been incentivised in the UK. The Bill will enable it to happen and—I hope—help that mindset to develop. The LEPs will play a part in that by setting up the structure to enable it to happen.
	We have put in place 24 enterprise zones offering discounted business rates and simplified planning to attract new local business and investment. The regional
	growth fund, the Growing Places fund and the Get Britain Building fund are providing a £3.3 billion boost to local economies and supporting tens of thousands of jobs, and through our welfare reforms we are seeking to bring welfare spending back under control and to target support. The 2010 spending review focused on reducing welfare costs through savings of about £7 billion a year.
	Localising council tax support will help to deliver savings of £500 million across Great Britain—this in an area of activity where expenditure more than doubled under the Labour Government. It is not a sign of a healthy economy that expenditure on council tax benefit should have doubled between 1997 and 2009-10. Instead, we are providing strong incentives for local authorities to support growth and improve employment opportunities, helping to reduce poverty and reliance on support, as well as hold down costs in the long term. Speaking as someone whose grandfather clawed his way out of poverty in the east end, I, like plenty of other Government Members, have as much personal experience of such things as anyone else who has spoken.
	The Bill has received extensive scrutiny. Its core principles were set out in the coalition agenda; we then proceeded with the local government resource review in early 2011; there was a consultation, along with eight detailed, technical papers to explain the thinking behind the reforms; and we have discussed the detail of the scheme through our local government finance working group and several sub-working groups. We have by no means ignored the views of local authorities; on the contrary, we have sought to engage with them, and will continue to do so, at every stage in the process. Those groups have been meeting frequently since January.
	Localising council tax is a pragmatic approach to balancing the need for reform with ensuring a sensible level of deficit reduction, and builds on the welfare reform White Paper, published in autumn 2010, setting out our broad intentions. We undertook pre-consultation engagement with local authorities and other groups to help them to understand the issues, and held delivery partner engagement events last August and September, as well as a full three-month consultation from August to October that generated about 400 responses.
	Against that background of consultation, nobody can say that the Government have not sought to engage with people over our reforms. Against that background of consultation and information sharing, last Thursday we published a series of statements of intent to provide clarity and assurance to the House and councils about how the reforms, including our proposal to fund localised support for council tax, will work in practice.
	I shall tell the House what we have published so far and how much we have sought to set out the agenda. We have announced that business rates will be split 50:50 between central and local government and confirmed that central Government will return their share of business rates, in its entirety, to local government, and we have confirmed that the system will not be reset until 2020 at the earliest to give sufficient reward and long-term certainty while ensuring that the scheme will be fiscally sustainable, thus protecting the interests of taxpayers and the wider economy.
	Our economic analysis, which has been independently verified, suggests that a 50% local share over a seven-year reset could create an additional £10 billion of gross domestic product. That figure is based on the multiplication
	of additional commercial floor space created through our incentive effect and, then, the additional gross GDP that stems from the economic activity in that commercial floor space.
	We have set out the statements of intent indicating what will be in the secondary legislation, including—as was noted in the previous debate—the safety net threshold, to be set at between 7.5% and 10%, to protect against volatility.
	On the localisation of council tax support, we have been clear that we will seek to provide as much detail as possible as early as possible. We continue to work with local authorities and service providers on the design of the scheme. [ Laughter. ] I know that the right hon. Member for Greenwich and Woolwich (Mr Raynsford) does not believe that any proposal that he did not make could be taken seriously, but that perhaps says rather more about him than about the Government.

Hilary Benn: I know that the Minister is an enthusiast, but those watching could be forgiven for thinking that the Bill was the answer to all the nation’s ills—at one count it was, with one thing and another, solving poverty and dealing with the deficit. Also, although I have a high regard for the Secretary of State, I am surprised that he did not make that speech, because after all, this is his flagship Bill. I know that we have a part-time Chancellor; I just hope that it is not proving contagious in the Cabinet. [ Interruption. ] I say that genuinely, as it would have been nice to hear from the Secretary of State, who has spoken only once on the Bill—on Second Reading. The House will recall that he claimed great things for the Bill, no doubt because the coalition agreement promised
	“a radical devolution of power and greater financial autonomy to local government”.
	The truth is, however, that as the Bill has progressed, it has failed to live up to that promise. I shall respond directly to the Minister’s point here.
	As we were reminded earlier today, it pays to try to get these things right. I say that because, with one exception, those sitting on the Government Front Bench have form. People remember that the last time wonderful words were said about a reform of local government finance, it was called the poll tax and the consequences from it included riots on the streets. The people would not have it and the Prime Minister lost her job. The Secretary of State argued that the current system gives central Government too much power and that he wanted to change that. We would take him at face value if that is what the Bill did, but it does not.
	What the Bill does and what the Secretary of State has created is a system that gives all the power to himself—the power to determine the central top-slice; the power to set the baseline; and the power to decide the extent of the tariff for the top-up and when the safety-net should kick in. It is a whole list of powers. If
	this really is localism—the argument that the Minister tried to advance—why are there all these central powers? It does not sound much like localisation to me, and it does not feel much like that to local government.
	That matters because when local authorities look at the way in which this Government have chosen to exercise the powers they already have, particularly in relation to spending, they have found, as we know, a pattern of cuts that is utterly unfair and the very opposite of “We are all in this together”. It also matters because, as the Minister will know, although he did not refer to it, one of the real concerns about the Bill that we have heard from colleagues in local government is that it will end up accentuating the gap between more prosperous and less well-off local authorities. That is a real concern. The Government’s only reply has been to say, “Don’t worry about it, because at least you will not be worse off in year one.”
	That is why the arrangements surrounding the safety net are so important. As the House knows, some authorities are very heavily dependent on the business rate income they get from a particular factory or a big employer. At the moment, it does not matter because it all goes into the central pot and is then divided and comes back, but under this Bill, it really will matter, and the consequences of losing that income—if the business were to close or relocate elsewhere, for instance—would be devastating. In those circumstances, what those local authorities want to know is whether the Government will be there to help. What we find when we look at the papers published last Thursday is that the safety net will kick in only when authorities meet a threshold for the decline in their business rate income, and we are advised that the threshold will be set between 7.5% and 10%. That is hardly reassuring, because it means that local authorities could lose a lot of money under this Bill before help arrives. To put it another way, councils are going to have to fall quite a long way before they hit the net.
	The Bill was also supposed to be about trying to get rid of a complex system for funding local government—we heard the argument a few moments ago. Frankly, however, all the Bill does is to replace one version of complexity with, in the words of London Councils, another “fiendishly complex system”. If anything, on the basis of the documents produced last week, the Bill has grown even more complex during its passage through the House.
	As for enabling local authorities to receive the benefits of business rate income and its growth, what do we discover? We discover that the Government like the idea of business rate income growth so much that they are going to take half of it for themselves. That is what was announced last week. It is no wonder that the Local Government Association has described this as a “tax on local authorities”, which it strongly opposes. What is more, the Government seem to intend that set-aside will continue beyond 2015. Why? Because they want to be able to continue to impose cuts on local government after the end of the current spending review period. Having heard the Minister’s argument that this was the be-all and end-all of localism, the Local Government Association said that it was
	“not a localising policy and goes against the Government's stated commitment to localism.”
	That deals with the first part of the Bill. What about council tax benefit? Rank inconsistency is plain for all to see. Only a few weeks ago, the Secretary of State was
	touring the country denouncing those who were planning a modest increase in council tax, including a number of Tory-controlled authorities. He said that he was
	“determined to protect hard-working families”,
	but here we have a Bill that will end up doing exactly what he was denouncing. We have legislation that will, from next year, impose council tax increases on many unsuspecting people. And whom has the Secretary of State chosen as his target for those higher council tax bills? In keeping with the Government’s philosophy, he has chosen people on low incomes—people who do not have a lot of money—because that is why they get council tax benefit in the first place; and on that, he is strangely silent.
	As if to flaunt just how out of touch they are, the Government had the nerve to say, in one of the documents published last week, that the aims of the council tax benefit cut included “reducing poverty”. This is a strange way of going about it. The Government are saying to people with not a lot of money “You know what? We are going to cut your income to make you work harder”, which is the precise opposite of the policy that they have pursued when it comes to millionaires and the tax cut that was announced in the Budget. They also claim that they do not want to affect work incentives, but, as my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) pointed out, that is nonsense.
	I pay tribute to my hon. Friend the Member for Warrington North (Helen Jones) for the forensic analysis to which she has subjected the Bill during its passage through this House. I am sure that her cogent arguments will be considered very carefully by those in the other place. I also pay tribute to other colleagues, including my right hon. Friend the Member for Greenwich and Woolwich—who chairs the Select Committee—and my right hon. Friend the Member for Wentworth and Dearne (John Healey).
	I am genuinely surprised that so few coalition Back Benchers have twigged what is going on in the Bill in relation to council tax. They do not seem to know what they are about to troop through the Lobbies to vote for. As we pointed out on Second Reading, and as has been said today, cutting council tax benefit by 10% while—rightly—protecting pensioners means an average 16% cut for everyone else, but the impact will not be felt evenly.
	In one of the other documents that were published last week, the Government said “We considered whether we should even things out to take account of the different proportions of pensioners in different local authority areas, but we rejected the idea.” As I have said, the impact will not be felt evenly, because some areas contain much higher percentages of pensioners than others. The list is like a roll call of seats represented by Government Members, but it seems that Government Members—with, I think, only two honourable exceptions during Second Reading and Committee—are either completely unaware that their constituents who are currently receiving council tax benefit will face higher council tax bills than elsewhere, because their areas contain a higher proportion of protected pensioners than others, or are not too bothered about it.
	Let me say this, very gently, to Back-Bench members of the coalition parties. When their constituents turn up at their surgeries in a year’s time, waving a bit of paper and saying “Why have you done this to me?”, they will be very, very bothered about what the Bill actually does. Indeed, all our constituents are likely to face additional
	cuts, because the forecast baseline for council tax benefit expenditure that is being used for the Bill is expected, miraculously—from my point of view and that of my hon. Friend the Member for Warrington North—to fall. Do Members really believe that demand for council tax benefit will decline in the next two years, in the light of the current state of the economy and the fact that we are now back in recession thanks to the Chancellor’s economic policy?
	When we come to the default scheme to be applied if local authorities do not come up with their own scheme, what do we find? We find that the Government’s courage fails completely in following through the 10% reduction, because the default scheme in effect replicates the current scheme. Instead of Ministers having the courage of their convictions and applying the 10% cut across the board, they have ducked that, and are expecting everyone else to show the courage they themselves have refused to demonstrate.
	In conclusion, whichever way we look at it, this part of the Bill is unfair and wrong, and no amount of trying to describe it as something else is going to alter what the changes in council tax benefit will do to our constituents on low incomes who need that support. We urge other Members to join us and vote against the Bill on Third Reading because it fails to meet the test on business rates that the Secretary of State set out when moving it on Second Reading and, as we have discovered in our discussions, it is even harsher in respect of cutting council tax benefit than appeared to be the case at first sight. In both those respects, the Bill reminds us of what this coalition Government are all about: they are unfair, out of touch and do not work—and nor, I fear, will the Bill.

Jim Cunningham: Thank you, Mr Speaker, for granting this Adjournment debate, which I very much appreciate. I wish to speak about the impact of the Budget and the Government’s policies on Coventry, and I might touch on issues that affect the west midlands. My purpose in doing so is twofold.
	First, many issues arising from the Budget will have a significant impact on the people of Coventry and should be debated properly. My constituents’ serious concerns regarding the effect of Government policies deserve to be raised. It is easy to discuss Budget policies in abstract terms, but we would do well to take the time to consider what they will mean for the regions and for people.
	Secondly, there is a distinct pattern to the Government’s policies and rhetoric: they are far too London-centric, as some people would say. Therefore, it is vital that we hold debates that focus on the regions and cities across this country in order to draw attention to their concerns, which the Government frequently ignore. I am sure that much of what will be discussed tonight applies to other regions and cities hit by the Budget. The Government show not nearly enough understanding of regional issues or appreciation of just how much places such as Coventry are hit by their policies.
	With that in mind, I want to outline why the Government’s optimism is misplaced, certainly as far as Coventry is concerned. We must not underplay the high level of unemployment currently being suffered. On Wednesday the Prime Minister assured us that overall unemployment was down and that the number of claimants of jobseeker’s allowance had decreased. Figures from the Office for National Statistics, which were published last week, reveal that there are 10,321 unemployed jobseekers in Coventry—three fewer than were counted in March.
	The Prime Minister’s complacency about the employment crisis shows an unrealistic approach to the stagnation we are witnessing in Coventry, where 4.9% of 16 to 24-year-olds are out of work. That is similar to the figure for the west midlands overall but significantly higher than that for Great Britain, which is 4%. That is particularly clear when we look at the percentage of male jobseeker’s allowance claimants. Nationally, the figure is 5.3%, which is already shockingly high, but Coventry is suffering from having 6.7% of the male population claiming jobseeker’s allowance. It is clear that the slight improvements the Government are celebrating simply do not apply to Coventry.
	Against the background of high unemployment, I wish to highlight the crucial role of the public sector in the growth of Coventry’s economy. Since the millennium, Coventry has benefited from significant redevelopment and regeneration, and the public sector has been crucial in that process. The concern now is that the Government’s public sector cuts will return Coventry to the hard times of the late ’70s, and certainly the ’80s, that many of us remember. It was a ruinous time in Coventry’s history and led to a whole generation struggling to reach their potential for decades after.
	Every public sector employee who loses their job through the Government’s public policy cuts is simply one more person without an income to spend on the local economy—one more person who will stop spending on businesses that in places such as Coventry are essential for stimulating growth in the local and national economies. Our public sector workers are a crucial part of our society and economy, and they do essential work for communities. It is ludicrous and poorly substantiated to claim that their work can be swiftly replaced by the private sector. There is certainly little evidence of that in Coventry.
	The Government have said that they intend to rebalance the economy, and they aim to do so by cutting the public sector and replacing it with the private sector. They have certainly achieved the former, but there is little evidence visible in Coventry of the necessary investment in the private sector. The Chancellor needs a clear and vigorous industrial strategy to encourage the private sector growth that he hopes will replace the public sector.
	That should be combined with a full jobs strategy, working on aligning the money going into the city with the people out of work, and targeting it at getting people back into work. That is particularly true of Coventry’s young people. Coventry saw an 87% increase in long-term youth unemployment last year, but there was nothing in the Budget to encourage any hope that this would be reversed.
	The Chancellor promised that the Budget would deliver a great deal for businesses such as those in Coventry, but the Coventry and Warwickshire chamber of commerce was greatly disappointed. The chamber’s chief executive, noting that the Budget’s rhetoric on the promise for business was not matched by any content, said:
	“If we’re honest, it was quite London-centric in many regards and that obviously wasn’t particularly welcomed. There were lots of small announcements that picked away around the edges but many of the things that weren’t mentioned caused most angst, such as empty property rate relief and the fact that business rates are going up.”
	People throughout the country were hopeful about the prospect of a Budget that would offer real support to local businesses to allow them to grow, but they were generally disappointed by the reality, which gave little practical encouragement to allow Coventry businesses to expand, and that is likely to get a lot worse as the year progresses.
	Coventry is famous for car making, but public sector workers drive much of the local economy. As we know, Becta and the Qualifications and Curriculum Development Agency are being abolished. It might seem an easy option to get rid of those education quangos, which employ a combined total of almost 800 people, many of whom are former teachers, but the relocation of the QCDA cost the Government more than £44million and came at a personal cost to many staff who relocated from London.
	We cannot, furthermore, ignore the strain that these cuts put on the private sector. Friends Life, previously Friends Provident, announced that it plans to close its offices in Coventry by the end of the first half of 2012, and 428 staff are employed there. Owing to those cuts, Coventry city council will be forced by the Tory-led Government to cut more than 500 posts, possibly, over the next 18 months. The amount that the council spends in the local economy will also be reduced dramatically, and that will impact on council staff.
	The front-loading of cuts means that staff losses will be required at an early stage of the spending cuts, and that will affect families throughout Coventry. This is the overall impact: Coventry city council is expected to lose about £45 million over the next two or three years; and all of that will have a significant knock-on impact on local businesses and employment in the region
	We can see what is happening in other sectors as the cuts and reforms begin to bite. For example, there are cuts of more than 20% in West Midlands police, equating to 2,500 jobs, and there are two parts to the Department for Communities and Local Government’s cuts for Coventry city council: formula grant, losing over £19 million; and specific grants, losing over £17 million. The council will not be able to continue to provide services at the same level. There will be far fewer grants with a lower overall value, and the great concern is that many grant streams will end.
	In the light of these destructive cuts, many people are extremely concerned about the proposed cuts to regional pay in the public sector. I cannot condemn this policy strongly enough. We in Coventry accept that living costs are far higher in London than they are in Coventry, but that is the reason for the London allowance and London stipend made available to many employees working in London. This is far removed from the idea that public sector workers should earn less for the same work because they live in places such as Coventry.
	The Treasury says that public sector pay is 18% higher than in the private sector in some parts of the UK, but that argument demonstrates a flawed approach by which the Office of National Statistics continues to compare private and public sector workers on a like-for-like basis. They are not directly comparable, and it is wilfully blind and evasive to pretend that they are. Two thirds of public sector workers are women, compared with about 40% of those in the private sector. Public sector workers tend to be older and more highly qualified. Professions such as nursing and teaching entail workers remaining in their profession for a long time, building up skills and salaries. None of those are characteristics that the public sector should be ashamed of. The private sector, by comparison, includes workers at the other end of the economy such as those in retail, catering and leisure. Industries in the private sector often pay their workers very low wages, and that skews any fair comparison between sectors.
	The public sector makes up roughly 20% of the work force, while the financial sector makes up 20% of the economy. More meaningfully, public sector wages are far from high in comparison with those in the private sector. I have always believed in lifting people up rather than lowering them down. Public sector workers are already being hit very hard with frozen salaries, higher pension contributions, and higher living costs. We cannot underestimate the negative impact on Coventry’s economy that would result from local public sector workers earning lower salaries. That would take money out of the regional economy, and the stunting effect on growth would outweigh any benefits to the Treasury. I therefore call strongly on the Government to allay the fears of those in Coventry who are worried about the prospect of regional pay cuts.
	Against those fears for the regional economy, let me touch on the impact of the Government’s policies on the vulnerable people of Coventry, who will be hit from
	many directions by their deficit reduction plan. Pensioners have been dealt a blow by the Government as the winter fuel payment has been slashed by up to £100. According to the BBC, family fuel costs have risen by about £1,250 over the past two years, and mortgage interest rates are starting to creep up, which will affect many families. Disabled and ill people are suffering from the removal of the mobility component of the disability living allowance. Coventry’s poorest residents are being undermined in the justice system by the removal of face-to-face legal advice in favour of a cheaper phone line. These are but a few of the policies that are having a huge negative impact on vulnerable individuals, who are now having opportunities to turn to public services taken away.
	I am deeply concerned about the local provisions for our young people. In June, £335 million was taken from the council through the abolition of Building Schools for the Future, which has yet to be replaced despite many promises about announcements. The Government cannot simply remove this vital investment from Coventry without even suggesting an alternative, let alone funding one. The Budget bore no reference to allocations of funding for school buildings. Aside from the obvious implications for Coventry schools, the Government are missing a great opportunity to stimulate the construction industry. I understand that the Government’s private building scheme is expected to rebuild between 100 and 300 schools nationally, but they have been dragging their feet on this issue for 20 months. Coventry city council has made it clear that some schools are in dire straits and urgently in need of investment. Without details of the Government’s plans, the council is unable to make its own plans.
	As of April, the Connexions careers service has been operating on a budget more than 70% smaller than in April 2010. That service gives young people the skills and confidence they need to get in to the workplace, and its downsizing will no doubt contribute to the high youth unemployment that we experience as a city and as a region.
	The children, learning and young people’s directorate has announced the loss of a further £1.2 million as a result of the 5% cut to the standards fund. The council had been relying on those crucial retention funds, but they will not be transferred to the next financial year.
	On that note, the Friargate development, which will revitalise and transform Coventry city centre, was going ahead on the expectation that Coventry would be one of the eight core cities to benefit from the tax incremental financing scheme. The Deputy Prime Minister told the local authority in 2010 that Coventry would be a recipient of that scheme. Not only is Coventry excluded, but the pot of money has been reduced to £150 million. The council was relying on that money, which was to be paid back on a tax basis, to allow the development to go ahead.
	The abolition of the funding from regional development agencies means that there is little funding to lever in private sector investment for large-scale redevelopment projects. Some colleagues will remember that Coventry and Warwickshire were led to believe that they would get an enterprise zone. Once again, they lost out. I therefore call on the Minister to reconsider the use of tax incremental financing to allow the city to grow. I understand that the council is also looking to take part in the city deals initiative. The city’s project is urgently in need that money.
	All of that will have an irreversible effect on the economic growth of the region and of Coventry. The leader of Coventry city council estimates that up to £25 million will be taken out of the local economy. The public and private sectors will not be able to invest in regeneration and infrastructure in the region. With the loss of the £355 million schools programme and the missed opportunity for the building industry, it is clear that the Government are wilfully blind to the devastating effect of their policies in Coventry. In addition, Coventry university hospital has to find an additional £28 million over the next year or two. The Government need to stop thinking only of London and think more about the other regions and cities that make up this country.

Geoffrey Robinson: Thank you, Mr Speaker, for granting this debate, and I congratulate my hon. Friend the Member for Coventry South (Mr Cunningham) on securing it. There may not be many of us here this evening, but you are still in the Chair, Mr Speaker, and we will be able to speak directly, without a lot of interruptions, beyond this Chamber to the people of Coventry about the list of indictments, which my hon. Friend stated so powerfully, against the effects that the Government’s policies will have on our city, whether or not that is their intention.
	My hon. Friend gave a long list of problems that the Government’s policies are creating for Coventry. I will start with Friargate. The inner city of Coventry is pretty well known. During the war, it was the most bombed city in the country, starting with the November raids right back in 1941. Afterwards, everybody thought that they owed a particular debt to Coventry, which was wonderful—I was not there at that time, of course—and the cathedral and the city centre were rebuilt. City planning was such at that time that good money, planning and thinking were put into it. A ring road was put around the city, and to this day traffic flows around Coventry and in and out of it marvellously well.
	The trouble is that the city centre has become derelict. People do not eat there socially, congregate there or spend time there. It is desolate, which leads to all those activities that we do not want to see in any of our city centres. We need a revision of the original city planning. That happened more than 50 years ago, which is long enough.
	Early on, the Government thought of an imaginative and good scheme called the tax incremental financing scheme, which was to be partly funded by incremental taxes from the locality, region or city, but would have Government encouragement and power behind it. No less a person than the Deputy Prime Minister promised that we would be beneficiaries of it. Sadly, however, we are used to his broken promises,. I say this as an admirer of his, but he has made and broken many promises, including on tuition fees. Despite our being given a specific promise that we would be included in the eight cities that could contribute to their own rehabilitation, which we desperately needed, we are not.
	I understand that all is not lost. A new initiative—an initiative rather than a scheme this time—has been put forward in which Coventry has been invited to take part, and our council has responded positively. I hope that Coventry can usefully and profitably participate in the city deal initiative. I regret to say that the city centre
	is a blot on the copybook of our huge post-war efforts to rebuild the country and its cities. We did not succeed with it, and we need to do so in the near future.
	Another area of great disappointment has been Coventry’s schools. The cancellation of the Building Schools for the Future programme has been a great setback. We were on the point of signing contracts, but as a responsible council, Coventry held back, and the Government applauded it for doing so. We urged it to sign the damn things and get the contracts signed, but no, it held back.
	Two schools in my constituency were affected. One, Woodlands, is an exemplary comprehensive built after the, war with the usual ’50s and ’60s concrete construction. The other, President Kennedy school—the name tells the date—was constructed on similar principles. Those schools are now in urgent need of replacement, but because the council did not want to behave even slightly irresponsibly and would not sign the contracts, we lost out by a total of £335 million, as my hon. Friend mentioned. I visit those two schools regularly and work with them. The attitude of the Secretary of State for Education towards them is very off-hand. It is not that I mind personally, because it does not hurt me, but he seems to ignore the fact that those schools had a good and reasonable case for making a demand on the public purse.
	The Secretary of State wrote in similar terms to Becta and to the Qualifications and Curriculum Development Agency. In fairness, the Conservatives said before the election that they would get rid of the QCDA—typically, they said that without hearing the case, but at least they had said that that was what they were going to do. The letter to the QCDA was, if I may say so, peremptory and impolite; it was unworthy of him, but at least they had said what they would do. Becta, though, was suddenly closed without anybody knowing anything about it. It seemed as though Coventry was being targeted again—I do not intend to make the obvious military historical reference here—as the centre that had to be hit.
	My hon. Friend the Member for Coventry South mentioned what the chief executive of the Coventry and Warwickshire chamber of commerce had said. I promise that she is no supporter of mine or of the Labour party. I am pleased to see the Economic Secretary on the Treasury Bench, because I would like her to listen to what the chief executive said. The best that she could find to say was, “If we’re honest”—that is very difficult for Governments to do, as I appreciate—the Budget
	“was quite London-centric in many regards and that obviously wasn’t particularly welcomed.”
	That is the final judgment of a chamber of commerce chief executive, a representative of the very people the whole Budget was meant to be about supporting.
	I put it to the Economic Secretary, who is to respond to the debate, that we desperately need help. We do not want handouts, we want help up. That is what we are after. If only she would meet us halfway, we could still do great things in Coventry, but we need a Government who are capable of responding to the need that exists.

Chloe Smith: I shall do my best in the six minutes remaining to cover a selection of the points raised by the hon.
	Members for Coventry South (Mr Cunningham) and for Coventry North West (Mr Robinson). I thank both for the passion with which they have spoken about their city in this interesting debate.
	The Government made clear in Budget 2012 that our priorities are threefold: to create a stable economy; to create a fairer, more efficient and simpler tax system; and to introduce reforms to support growth. The Budget and the national infrastructure plan published the preceding autumn set out the Government’s latest steps towards achieving those priorities, based on a new model of sustainable and balanced growth, including in Coventry and more widely.
	As the hon. Gentlemen made clear, the west midlands is not without its challenges, but the region remains a significant contributor to the national economy. The reforms set out in the Budget will give businesses and individuals in the region a further boost by cutting corporation tax by an additional 1% on top of the rate cuts announced last year. From April this year, the rate will be reduced from 26% to 24%—it will eventually fall to 22% in 2014.
	The reforms also provide a boost by increasing the personal allowance by £1,100, taking 75,000 people in the west midlands out of tax altogether, and by increasing the Growing Places fund to provide additional funding for the infrastructure needed to unlock developments that will lead to jobs and growth. Local enterprise partnerships in Coventry and Warwickshire will receive a further £4.1 million. We confirm that Birmingham has been selected to become a super-connected city, and we are investing almost £60 million in stalled development projects within the west midlands. Furthermore, we will support individuals and families to buy new build property with just a 5% deposit through the NewBuy scheme, and increase the maximum right-to-buy discount to £75,000, which is £49,000 more than the current west midlands limit of £26,000.
	The hon. Member for Coventry South spoke of youth unemployment, which I agree is a vital issue for our country. He will be aware of the answer given to him by the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), on 13 December 2011. He directed the hon. Gentleman
	“to the new programme recently announced to make it easier and simpler for SMEs to take on apprenticeships”
	and said that the Government
	“are providing funding to the tune of up to £1,500 per apprentice.”—[Official Report, 13 December 2012; Vol. 537, c. 254WH.]
	That scheme is to be welcomed.
	The challenge laid down by the hon. Gentlemen, which the Government have taken up, was to return the UK economy to sustainable economic growth that is
	more balanced across the country. We have established local enterprise partnerships and enterprise zones.